Interim Injunction not Estopped by Prior Agreement
In 2019 NZHC 2522 Rapid Labels Ltd v Excel Digital Ltd the Judge held that a prior agreement between the parties did not estop Rapid from seeking an interim injunction against Excel...
Communications between the parties commenced after Rapid learnt of Excel’s launching of a subsidiary that would use the brand RAPT in relation to labels. Subsequent to direct communications between the chief executives in late March 2019 the subsidiary changed its name to W-RAPT LABELS LIMITED, following which Rapid commenced litigation seeking an interim injunction under the Fair Trading Act to prevent use by the subsidiary of the brands RAPT, WRAPT, W-RAPT or logos containing a W standing on its left-side followed by RAPT.
Excel claim that in the meeting it had been indicated that no branding objection would be raised if they added a W in-front of RAPT, and that they incurred expenses in rebranding for a 1st April launch. However, although accepting the evidence was admissible for the purpose of showing there was an agreement, Rapid sought to have those communications privileged for any other purposes on account of being on a ‘without prejudice’ basis.
The Judge held that the representations by Rapid’s chief executive were not clear and unequivocal and were subject to formal approval that would involve further conditions, while also noting precedent to the effect that agreements in principle are not binding. Consequently it was unreasonable for Excel to rely upon the agreement in principle when rebranding before a formal agreement was reached. Further, by including a hyphen between the W and R and by using logos containing a W standing on its left-side followed by RAPT, Excel were found to have gone beyond what was agreed in principle. Consequently, Rapid were not estopped from bringing the interim injunction proceedings.
Nonetheless, the Judge went on to decline the interim injunction. While the aural similarities with Rapid’s brand – which has a high level of awareness amongst relevant consumers – are sufficient for establishing a serious question to be tried given the prevalence of cold-calling in the market, the balance of convenience was found to favour Excel. Despite the aural similarities there are also visual and conceptual differences which would make the determination of the likelihood of confusion at full trial finely balanced and Excel would be irrevocably prejudiced by the granting of an interim injunction.